Minyanville's T3 Morning Market Call: Futures Indicate Higher Open to Kick Off Q4

By T3Live.com  SEP 27, 2012 9:32 AM

Tech did get a hit a bit harder than some of other sectors, which is a bit of red flag.


Futures have a positive tone to kick off the fourth quarter. There are lots of question marks going into this quarter as indices are having a nice year so far. The S&P is up 15%+ and the Nasdaq is up 18%+.  Some market participants enjoyed this move and some have fought this move, so everyone will be approaching the next three months differently. Some will be protecting, and some will be sweating that they might have to play some catch up.  

The theme remains the same: Global slowdown vs. central planning and stimulus!

Recently, the action has been a bit sloppy and choppy. September 14 marked the high of the year as we peaked at 1474.  On the same day, most oscillators hit extreme overbought readings. Since then, we’ve had a very “choppy” environment as the S&P lost some momentum when we broke 1449 and then put in a small pivot low around 1430 Wednesday.  Markets are trying to build a bit of floor above this level as the 21-day played some catch up. Will this be the pivot low to accumulate stock around for a move back to highs of the year, or will we see more of a pullback? Tactical traders will be trying to figure that out, but macro investors don’t have much to worry about.

Lately you’ve had to sell strength and buy weakness, as momentum has been hard to find. Today should be interesting. Typically new funds come in to start a new quarter, so seeing if we build on this open or if it gets sold could answer some questions about whether 1430 sticks or we need to do a bit more downside probing.

S&P resistance stands at 1447-1450, which is a pretty important spot to watch for short-term direction. Bears need to try and defend this level to keep some pressure on. If bulls reclaim this area with volume and force, this will set us in motion for a move back to the highs of the year.

If they sell today’s open, 1430 is important support, then 1422-1426, with the 50-day moving average at 1412.

Tech did get a hit a bit harder than some of other sectors, which is a bit of red flag, but the QQQ is still over the 50-day moving average. QQQ back above $69.50-69.75 will make the bulls feel a bit better. The semiconductors ETF (NYSEARCA:XSD) continues to be a major laggard. Apple (NASDAQ:AAPL) bounced back hard on Thursday to try and reclaim its 21-day after slicing through it Tuesday. Then on Friday, it gave back way too much to keep me committed. Stocks should hold top third of a recent move to keep money committed; on Friday, it gave back more than half. Action here is a bit concerning. I would keep it light at this stage. Most traders are now looking for two way action, as shorts are getting paid for being cute. The stock needs to get back above $676 in order to relieve some pressure. Above $681 is even better. If this goes negative today, look at $666 then a bigger level around $660-$662. The 50-day moved up to $649.

Google (NASDAQ:GOOG) remains one of the best acting high beta names. It has a high level flag. If anything can show momentum, this can. Above $762-764 it can start on its way to $800+. I would like to see a bit more time to let moving averages catch up.

Amazon (NASDAQ:AMZN) is choppy but trying to stay above the 21-day. I would stay with it but stay reduced.

Baidu (NASDAQ:BIDU) started acting a bit better late last week. It was downgraded by Jeffries this morning, and holding $114 would be good.

Facebook (NASDAQ:FB) saw nice action Friday as its trying to repair its chart. The stock is trying to repair itself since the Barron’s slap.  It’s trying to get in the gap that closes at $22.60.

LinkedIn (NYSE:LNKD) is still holding the 21-day, but needs some time. Traders will get excited if it can get over $124-125.

Gold (NYSEARCA:GLD) and silver (NYSEARCA:SLV) are a bit softer with the S&P futures up.  Recently they move together. See what goes on here next few sessions as both these metals are holding in well after a spirited move since August 20-August 21. Gold's 8-day MA is $171.25ish, then the 21-day is $168.64. Silver's 8-day MA is $33.20 and then the 21-day $32.34.

Scott Redler is flat.